SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the period ended June 30, 1994
Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934<PAGE>
For the transition
period from to
Commission file number 1-10720
ILLINOIS CENTRAL CORPORATION
(Exact name of registrant as specified in its charter
Delaware 13-3545405
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
455 North Cityfront Plaza Drive, Chicago, Illinois 60611-5504
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312)755-
7500
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months, (or
for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
YES X NO
As of June 30, 1994, 42,604,829 common shares were
outstanding.
ILLINOIS CENTRAL CORPORATION
AND SUBSIDIARIES
FORM 10-Q
Three Months and Six Month Periods Ended June 30, 1994
CONTENTS
Part I - Financial Information:
Item 1. Financial Statements:
Consolidated Statements of Income 3
Consolidated Balance Sheets 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8
Part II - Other Information:
Item 1. Legal Proceedings 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
Exhibit Index E-1
Exhibit 11 E-2
ILLINOIS CENTRAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
($ in millions)
(Unaudited)
Three Months Six Months
Ended June 30, Ended June 30
1994 1993 1994 1993
Revenues $ 145.2 $ 132.1 $ 292.7 $ 274.8
Operating expenses:
Labor and fringe
benefits 47.9 46.2 96.9 93.3
Leases and car hire 14.4 16.6 27.1 34.8
Diesel fuel 7.7 7.3 15.5 15.0
Materials and
supplies 9.3 8.6 20.1 18.1
Depreciation and
amortization 6.6 5.8 13.1 11.4
Other 14.1 9.2 24.2 17.4
Operating expenses 100.0 93.8 196.9 190.0
Operating income 45.2 38.3 95.8 84.8
Other income, net 1.0 1.0 1.6 1.6
Interest expense, net (6.7) (8.7) (14.0) (18.9)
Income before income
taxes, extraordinary
item and cumulative
effect of changes in
accounting principles 39.5 30.6 83.4 67.5
Provision for income
taxes 14.7 10.7 30.9 23.6
Income before extra-
ordinary item and
cumulative effect of
changes in account-
ing principles 24.8 19.9 52.5 43.9
Extraordinary item, net - (23.4) - (23.4)
Cumulative effect of
changes in account-
ing principles - - - (0.1)
Net Income $ 24.8 $ (3.5) $ 52.5 $ 20.4
Income per share:
Income before extra-
ordinary item and
cumulative effect of
changes in account-
ing principles $ .58 $ .47 $ 1.23 $ 1.03
Extraordinary item
net - (0.55) - (0.55)
Cululative effect of
changes in account-
ing principles - - - -
Income per share $ .58 $ (0.08) $ 1.23 $ 0.48
Weighted average
number of shares of
common stock and
common stock equiva-
lents outstanding 42,719,256 42,755,178 42,721,663 42,740,916
<PAGE>
ILLINOIS CENTRAL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
($ in millions)
(Unaudited)
ASSETS
Current assets: June 30, 1994 December 31, 1993
Cash and temporary cash
investments $ 14.5 $ 10.7
Receivables, net of allowance
for doubtful accounts
of $2.6 in 1994 and $3.1 in 1993 28.9 80.3
Materials and supplies, at
average cost 20.2 20.1
Assets held for disposition 9.1 9.1
Deferred income taxes - current 21.9 22.8
Other current assets 3.7 3.6
Total current assets 98.3 146.6
Investments
Properties:
Transportation:
Road and structures, including
land 965.7 947.9
Equipment 125.6 118.1
Other, principally land 40.4 40.4
Total properties 1,131.7 1,106.4
Accumulated depreciation (25.3) (20.9)
Net properties 1,106.4 1,085.5
Other assets 11.4 10.9
Total assets $ 1,231.7 $ 1,258.7
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Current maturities of long-
term debt $ 2.5 $ 24.3
Accounts payable 54.6 54.4
Dividends payable 8.9 9.0
Income taxes payable 8.9 1.5
Casualty and freight claims 24.7 24.7
Employee compensation and
vacations 16.5 15.8
Taxes other than income taxes 11.6 14.0
Accrued redundancy reserves 6.7 6.8
Other accrued expenses 28.6 28.5
Total current liabilities 163.0 179.0
Long-term debt 319.6 360.3
Deferred income taxes 202.4 202.3
Other liabilities and reserves 134.5 139.7
Contingencies and commitments
Stockholders' equity:
Common stock, par value $.001,
authorized 65,000,000 shares,
42,838,564 shares issued and
42,604,829 shares outstanding - -
Additional paid - in capital 164.7 164.2
Retained income 251.2 216.5
Treasury stock (233,735 shares) (3.7) (3.3)
Total stockholders' equity 412.2 377.4
Total liabilities and
stockholder's equity $ 1,231.7 $ 1,258.7
The following notes are an integral part of the consolidated
financial statements
ILLINOIS CENTRAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
($ in millions)
(Unaudited)
Six Months Ended June 30,
1994 1993
Cash flows from operating
activities:
Net income $ 52.5 $ 20.4
Reconciliation of net income
to net cash provided by (used
for) operating activities:
Extraordinary item, net - 23.4
Cumulative effect of changes
in accounting principles - 0.1
Depreciation and amoritization 13.1 11.4
Deferred income taxes 0.9 18.0
Equity in undistributed earnings
of affiliates, net of dividends
received (0.3) (0.1)
Net gains on sales of real
estate 0.1 -
Cash changes in working capital 56.0 (1.7)
Changes in other assets (0.6) (2.3)
Changes in other liabilities
and reserves (3.3) (7.6)
Net cash provided by (used
for) operating activities 118.4 61.6
Cash flows from investing activites:
Additions to properties (35.4) (33.0)
Proceeds from real estate sales 0.2 0.3
Proceeds from equipment sales 2.8 2.1
Proceeds from sales of
investments 0.5 0.2
Other 0.5 (2.1)
Net cash provided (used for)
investing activities (31.4) (32.5)
Cash flows from financing activities:
Proceeds from issuance of debt 33.0 219.1
Principal payments on debt (75.1) (244.9)
Net proceeds (payments) in
commercial paper (22.1) -
Dividends paid (17.8) (12.7)
Proceeds from exercise of stock
options and warrants - 0.2
Purchase of subsidiary's common
stock (1.2) (0.2)
Net cash provided by (used for)
financing activities (83.2) (38.5)
Changes in cash and temporary cash
investments 3.8 (9.4)
Cash and temporary cash investments
at beginning of period 10.7 34.6
Cash and temporary cash investments
at end of period $ 14.5 $ 25.2
Supplemental disclosure of cash
flow information:
Cash paid during the year for:
Interest (net of amount
capitalized) $ 14.7 $ 24.1
Income taxes $ 24.1 $ 6.0
The following notes are an integral part of the consolidated
financial statements.
ILLINOIS CENTRAL CORPORATION
AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
1. Basis of Presentation
Except as described below, the accompanying unaudited
consolidated financial statements have been prepared in
accordance with accounting policies described in the 1993
Annual Report on Form 10-K and should be read in conjunction
with the disclosures therein.
In the opinion of management, these interim financial
statements reflect all adjustments, consisting of normal
recurring accruals, necessary to present fairly the financial
position, results of operations and cash flows for the periods
presented. Interim results are not necessarily indicative of
results for the full year. Certain 1993 amounts have been
reclassified to conform with the presentation used in the 1994
financial statements.
Income Per Share
Income per common share of the Company is based on the
weighted average number of shares of common stock and common
stock equivalents outstanding during the period.
2. Sale of Accounts Receivable
In the first quarter of 1994, the Railroad entered into a
revolving agreement to sell undivided percentage interests in
certain of its accounts receivable, with recourse, to a
financial institution. The agreement, which expires March
1997, allows for sales of accounts receivable up to a maximum
of $50 million. The Railroad services the accounts receivable
sold under the agreement. As of June 30, 1994 the Railroad
received cash proceeds of $50.0 million as a result of such
sales of accounts receivable. The Railroad retains the same
exposure to credit loss as existed prior to the sale. Costs
related to the agreement will vary generally in correlation
with changes in prevailing interest rates. These costs, which
are included in Other Income, Net, were $.5 million and $.9
million for the second quarter and six month period ended June
30, 1994, respectively.
3. Common Stock and Dividends
On June 2, 1994, the Board of Directors approved a quarterly
dividend of $.21 per share which was paid July 7, 1994. The
Board intends to continue its policy of quarterly dividends.
Future dividends may be dependent on the Railroad's ability
to pay cash dividends to the Company. Certain covenants of
the Railroad's debt agreements restrict the level of dividends
it may pay to the Company. At June 30, 1994, approximately
$93 million was free of such restrictions. The Railroad paid
approximately $9.2 million of this amount to the Company in
July 1994.
4. Certain Investments in Debt and Equity Securities
Effective January 1, 1994, the Company adopted the Statement
of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities" ("SFAS No.
115"). SFAS No. 115 expands the use of fair value accounting
for certain investments in debt and equity securities but
retains the use of the amortized cost method for investments
in debt securities that the reporting enterprise has the
positive intent and ability to hold to maturity. All of the
investments held by the Company are temporary and held for
less than 90 days. They are included in the Consolidated
Balance Sheet as part of Cash and Temporary Cash Investments.
For the periods presented, all investments were in U.S.
Corporate demand notes. It is the intent of the Company to
hold all debt securities to maturity, therefore, the following
is provided in accordance with SFAS No. 115 ($ in millions):
6-30-94 1-1-94
Aggregate fair value $ 10.3 $ 5.6
Gross unrealized holding gains $ - $ -
Gross unrealized holding losses $ - $ -
Amortized cost $ 10.3 $ 5.6
5. Recent Event
On July 19, 1994, the Company and Kansas City Southern
Industries, Inc. (KCSI) announced the signing of a letter of intent
providing for the acquisition of KSCI, excluding those businesses,
assets and operations which are not part of the business, assets
and operations of Transportation Services Division, which division
consists of the Kansas City Southern Railway ("KCSR") and certain
related assets. The letter of intent contemplates that the
acquisition will be accomplished by the merger of KCSI into the
Company (the "Merger") immediately following the spin-off by KCSI
to its shareholders of all of its equity interest in the businesses
constituting the financial services and information processing
operations and certain non-transportation assets of KCSI. As a
result of the Merger, KCSR will become a wholly owned subsidiary
of the Company.
Pursuant to the Merger, KCSI shareholders will receive, on a
tax-free basis, a distribution of approximately 21.2 million shares
of Company common stock. In addition, the letter of intent
anticipates that the Company will assume up to approximately $929
million of KCSI indebtedness and provide $6 million to purchase
KCSI's preferred stock.
Either party can terminate the letter of intent if definitive
documentation is not executed within ninety days of the signing of
the letter of intent. To complete the acquisition, the KCSI must
receive a favorable tax ruling from the IRS and shareholders of
both companies must approve the transaction. Closing of the
acquisition is expected to occur in the first half of 1995. Since
the Interstate Commerce Commission (ICC) must approve the Company's
application to control two Class I railroads all of the Company's
interest in the voting stock of the Illinois Central Railroad
Company will be placed in a voting trust immediately prior to
closing of the Merger and pending ICC approval. The ICC approval
process is expected to be completed within a year from the
submission of an application (in late 1994), but the ICC could take
as many as 31 months to rule.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The discussion below takes into account the financial
condition and results of operations of the Company for the periods
presented in the consolidated financial statements.
Results of Operations
Three Months Ended June 30, 1994 Compared to Three Months Ended
June 30, 1993
Revenues for 1994 increased from the prior year quarter by
$13.1 million or 9.9% to $145.2 million. The increase was a result
of a 9.9% increase in the number of carloads coupled with increases
in other revenue, other than gross freight revenue, which were
partially offset by a decrease of 3.1% in gross freight revenue per
carload. For the quarter, the Company experienced carloading
increases in coal (32.6%), intermodal (47.6%) and chemicals (3.0%),
offset by decreased grain loads (14.7%). Prior year carloadings
in coal were adversly impacted by United Mine Workers (UMW) strike
against several coal producers served by the Railroad.
Operating expenses for 1994 increased $6.2 million, or 6.6%
as compared to 1993. Increases in labor, materials and supplies
and depreciation were offset by decreased lease and car hire
expense. The shift in expenses from leases and car hire to
depreciation reflects the Company's shift from leasing to ownership
of its fleet. Other expense for the 1994 second quarter was
impacted by non-recurring favorable adjustments to reserves
recorded in 1993, significant training and safety program costs and
equipment costs and buyouts for approximately $1.0 million each
which are not expected to be experienced in the future.
Additionally, franchise and ad valorem taxes have increased
approximately $1.0 million year over year.
Operating income for 1994 increased 18.0% ($6.9 million) to
$45.2 million from $38.3 million in 1993, as a result of increased
revenues cited above, partially offset by increased operating
expenses.
Net interest expense decreased by 23.0% to $6.7 million as
compared to $8.7 million in 1993, primarily as a result of the 1993
refinancing of the Company's debt, the shift to receivable sales
financing and the changes in interest rates.
Six Months Ended June 30, 1994 Compared to Six Months Ended June
30, 1993
Revenues for 1994 increased from the prior year by $17.9
million or 6.5% to $292.7 million. The increase was a result of
a 6.5% increase in the number of carloads coupled with increases
in other revenue, other than gross freight revenue, which were
partially offset by a decrease of 2.3% in gross freight revenue per
carload. For the first six months of 1994 the Company experienced
carloading increases in coal (22.4%), intermodal (37.7%) and
chemicals (3.5%) offset by decreased grain loads (14.8%). The UMW
strike negatively impacted full year 1993 coal carloadings.
Operating expenses for 1994 increased $6.9 million, or 3.6%
as compared to 1993, reflecting the variances cited above for the
three months ended June 30, 1994.
Operating income for 1994 increased 13.0% ($11.0 million) to
$95.8 million from $84.8 million in 1993, as a result of increased
revenues partially offset by the increased operating expenses.
Net interest expense decreased 25.9% to $14.0 million as
compared to $18.9 million in 1993, primarily as a result of the
1993 refinancing of the Company's debt, the shift to receivable
sales financing and the changes in interest rates.
Effective January 1, 1993, the Company adopted both the
Statement of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions" ("SFAS
No. 106") and the Statement of Financial Accounting Standards No.
112, "Employers' Accounting for Postemployment Benefits" ("SFAS No.
112"). SFAS No. 106 requires that future costs associated with
providing postretirement benefits be recognized as expense over the
employees' requisite service period. The pay-as-you-go method used
prior to 1993 recognized the expense on a cash basis. SFAS No. 112
establishes accounting standards for employers who provide
postemployment benefits and clarifies when the expense is to be
recognized. As a result of adopting these two standards the
Company recorded a decrease to net income of $84,000 (net of taxes
of $46,000) as a cumulative effect of changes in accounting
principles.
In June 1994, the Railroad signed a marketing agreement with
Southern Pacific Railroad Corporation (SP) for the north/south
transport of intermodal units in the Chicago-Texas-Mexico market,
beginning July 1, 1994. At least 30,000 intermodal units which the
SP moves in this market annually will be routed more directly to
and from Chicago through Memphis over the Railroad's system.
Liquidity and Capital Resources
Operating Data: Six Months Ended June 30,
1994 1993
($ in millions)
Cash flows provided by (used for):
Operating activities $118.4 $ 61.6
Investing activities (31.4) (32.5)
Financing activities (83.2) (38.5)
Net change in cash and
temporary cash investments $ 3.8 $ (9.4)
Operating activities in 1994 provided $118.4 million in cash,
primarily from net income before depreciation and deferred taxes,
and the $50.0 million proceeds from the sale of accounts
receivables.
During 1994, additions to property of $35.4 million include
approximately $16.2 million for track and bridge rehabilitation and
approximately $11.0 million for equipment upgrades, including lease
conversions. The Company anticipates that base capital
expenditures for 1994 will be approximately $60 million and will
concentrate on track maintenance, renewal of track structures such
as bridges, and upgrading the locomotive fleet. If additional
opportunities such as lease conversions or market-driven expansion
occur in 1994, the total capital spending including capitalized
leases could be approximately $80 million. To date capital leases
and lease-conversions have totaled approximately $9.9 million which
includes approximately $1.7 million converted in July 1994.
Expenditures for capital additions and lease conversions are
expected to be met from current operations and other available
sources.
Over the last three years, management has concentrated on
reducing leverage, expanding funding sources, lowering funding
costs and upgrading the debt ratings issued by the rating services.
The latest steps in this process are a first quarter of 1994
agreement with a financial institution whereby the Railroad sells
certain of its accounts receivables and the initiation in November
1993 of a public commercial paper program.
In the first quarter of 1994, the Railroad entered into a
receivables purchase agreement to sell undivided percentage
interests in certain of its accounts receivable, with recourse, to
a financial institution. The agreement, which expires March 1997,
allows for sales of accounts receivable up to a maximum of $50
million. The Railroad services the accounts receivable sold under
the agreement. During the first half of 1994, the Railroad
received cash proceeds of $50.0 million as a result of such sales
of accounts receivable. The Railroad retains the same exposure to
credit loss as existed prior to the sale. Costs related to the
agreement will vary generally in correlation with changes in
prevailing interest rates. These costs, which are included in
Other Income, Net, were $.9 million for the six months ended June
30, 1994.
The commercial paper, issued by the Railroad, is rated A2 by
S&P, F2 by Fitch Investors Service, Inc. ("Fitch") and P3 by
Moody's and is supported by a $100 million Revolver with the
Railroad's bank lending group. At June 30, 1994, $16.0 million of
commercial paper was outstanding with an average interest rate of
4.78%. During the first half, the amount outstanding ranged from
$13.0 million to $47.7 million. The Railroad views this program
as a significant long-term funding source and intends to issue
replacement notes as each existing issue matures and accordingly
issuances are classified as long-term.
At June 30, 1994, no amounts had been drawn under either the
Railroad's Revolver or Bank Line. The $100 million available under
the Revolver was limited to $80.0 million because $16.0 million in
commercial paper was outstanding and $4.0 million in letters of
credit had been issued. The Bank Line is structured as a 364-day
renewal instrument and the Company intends to renew it on an on-
going basis. At June 30, 1994, no amounts were outstanding.
The Railroad also has an uncommitted $25.0 million floating
rate Credit Facility. At June 30, 1994, no amounts were
outstanding.
Certain of the Company's financing/leasing subsidiaries have
approximately $13.8 million of outstanding debt incurred in the
acquisition of 61 locomotives during 1993 and 1991. One subsidiary
used a short-term bridge financing of $21.7 million to acquire
1,522 box cars in December 1993. Such borrowings are secured by
the equipment acquired. On July 5, 1994, the bridge loan was
refinanced with a seven year bank facility (a two year revolver
which converts to a five year term facility). This bank facility
has interest rates at either LIBOR + 7/8 or LIBOR + 1 1/8
predicated by convenant performance. Initial borrowings are at
LIBOR + 1 1/8 interest, accordingly outstanding amounts have been
reclassified as long-term. The Company believes that its available
cash, cash generated by its operations and cash available via
commercial paper, the Revolver, the Bank Line and the Credit
Facility will be sufficient to meet foreseeable liquidity
requirements.
Various borrowings of the Company's subsidiaries are governed
by agreements which contain financial and operating covenants. All
entities were in compliance with these covenant requirements at
June 30, 1994, and management does not anticipate any difficulty
in maintaining such compliance.
The Company paid its tenth consecutive quarterly cash dividend
on July 7, 1994. The Board intends to continue a policy of
quarterly dividends. Future dividends may be dependent on the
Railroad's ability to pay cash dividends to the Company. Certain
covenants of the Railroad's debt agreements restrict the level of
dividends it may pay to the Company. At June 30, 1994,
approximately $93 million of Railroad equity was free of such
restrictions. The Railroad paid approximately $9.2 of this amount
to the Company in July 1994.
The Company has paid approximately $2.9 million in the first
half of 1994 for costs associated with the various labor agreements
signed in 1992 and 1991. The Company anticipates that an
additional $3.7 million will be required in 1994 related to all
such agreements. These requirements are expected to be met from
current operating activities or other available sources. In June
1994, the Brotherhood Railway Carman Division of the Transportation
Communication Union (BRC) and the Railroad signed an agreement
covering wage and work rule issues through 1999. The agreement was
ratified July 20, 1994. The BRC represents approximately 300
employees who inspect and maintain the Railroads' freight car
fleet.
The Railroad has entered into various hedge agreements
designed to mitigate significant changes in fuel prices. As a
result, approximately 93% of the Railroad's short-term diesel fuel
requirements through March 1995 and 46% through June 1995 are
protected against significant price changes.
The Railroad is and will continue to be subject to extensive
regulation under environmental laws concerning, among other things,
discharges into the environment and the handling, storage,
transportation and disposal of waste and hazardous materials.
Inherent in the operations and real estate activities of the
Railroad and other railroads is the risk of environmental
liabilities. As discussed in Item 3. "Legal Proceedings," in the
Company's definitive Annual Report Form 10-K for the year ended
December 31, 1993, dated March 16, 1994, Commission File No. 1-
10720, several properties on which the Railroad currently or
formerly conducted operations are subject to governmental action
in connection with environmental damage. In the opinion of
management, the Company has adequate reserves to cover the costs
for investigation and remediation. However, there can be no
assurance that environmental conditions will not be discovered
which might individually or in the aggregate have a material
adverse effect on the Company's financial condition.
Recent Event
On July 19, 1994, the Company and Kansas City Southern
Industries, Inc. (KCSI) announced the signing of a letter of intent
providing for the acquisition of KSCI, excluding those businesses,
assets and operations which are not part of the business, assets
and operations of Transportation Services Division, which division
consists of the Kansas City Southern Railway ("KCSR") and certain
related assets. The letter of intent contemplates that the
acquisition will be accomplished by the merger of KCSI into the
Company (the "Merger") immediately following the spin-off by KCSI
to its shareholders of all of its equity interest in the businesses
constituting the financial services and information processing
operations and certain non-transportation assets of KCSI. As a
result of the Merger, KCSR will become a wholly owned subsidiary
of the Company.
Pursuant to the Merger, KCSI shareholders will receive, on a
tax-free basis, a distribution of approximately 21.2 million shares
of Company common stock. In addition, the letter of intent
anticipates that the Company will assume up to approximately $929
million of KCSI indebtedness and provide $6 million to purchase
KCSI's preferred stock.
Either party can terminate the letter of intent if definitive
documentation is not executed within ninety days of the signing of
the letter of intent. To complete the acquisition, the KCSI must
receive a favorable tax ruling from the IRS and shareholders of
both companies must approve the transaction. Closing of the
acquisition is expected to occur in the first half of 1995. Since
the Interstate Commerce Commission (ICC) must approve the Company's
application to control two Class I railroads all of the Company's
interest in the voting stock of the Illinois Central Railroad
Company will be placed in a voting trust immediately prior to
closing of the Merger and pending ICC approval. The ICC approval
process is expected to be completed within a year from the
submission of an application (in late 1994), but the ICC could take
as many as 31 months to rule.
Recent Accounting Pronouncements
In May 1993, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 114, "Accounting
by Creditors for Impairment of a Loan" ("SFAS No. 114").
SFAS No. 114 requires that impaired loans be measured based
on the present value of expected future cash flows discounted at
the loan's effective interest rate. This statement applies to
financial statements for fiscal years beginning after December 31,
1994, with earlier adoption encouraged. The Company is currently
evaluating the impact of this statement, if any, on its reported
results. Early adoption is not anticipated.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Incorporated herein by reference is Item 3. - "Legal
Proceedings" in the Company's definitive Annual Report Form 10-K
for the year ended December 31, 1993, dated March 16, 1994,
Commission File No. 1-10720. In addition, the following
development is reported:
Environmental
Iselin Yard, Jackson, Tennessee
In June 1994, the Tennessee Department of Environment and
Conservation, issued an order requiring the Railroad and another
potentially responsible party to conduct studies and clean-up
activities in accordance with State directives.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
See Exhibit Index
See items marked with "*" on the Exhibit Index beginning
on page E-1 of the Report. Items so marked identify
management contracts or compensatory plans as
arrangements as required by Item 14.
(b) Reports on Form 8-K:
On July 20, 1994, to report the signing of a letter of
intent providing for the acquisition by the Company of
the Kansas City Southern Railway and certain related
assets.
On July 27, 1994, Form of Letter of Intent providing for
the acquisition of the Company of the Kansas City
Southern Railway and certain related assets.
ILLINOIS CENTRAL CORPORATION
Signatures
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Company has duly caused this report to be signed
on its behalf by the undersigned hereto duly authorized.
ILLINOIS CENTRAL CORPORATION
Dale W. Phillips
Vice President & Chief Financial
Officer
John V. Mulvaney
Controller
Date: August 8, 1994
ILLINOIS CENTRAL CORPORATION AND SUBSIDIARIES
COMPUTATION OF INCOME PER COMMON SHARE
($ in millions, except share date)
Three Months Six Months
Ended June 30 Ended June 30
1994 1993 1994 1993
Income before extra-
ordinary item and
cumulative effect of
changes in account-
ing principles $ 24.8 $ 19.9 $ 52.5 $ 43.9
Extraordinary item - (23.4) - (23.4)
Cumulative effect of
changes in account-
ing principles - - - (0.1)
Net income $ 24.8 $ (3.5) $ 52.5 $ 20.4
Calculation of
average number of
shares outstanding:
Primary:
Weighted average of
number of common
shares outstanding 42,604,829 42,630,868 42,604,639 42,627,154
Effect of shares
issuable under
stock options 114,427 124,310 117,024 113,762
42,719,256 42,755,178 42,721,663 42,740,916
Fully diluted:
Weighted average
number of common
shares outstanding 42,604,829 42,630,868 42,604,639 42,627,154
Effect of shares
issuable under stock
options (1) 109,477 122,961 109,477 122,961
42,714,306 42,753,829 43,714,116 42,750,115
Income per common
share:
Primary:
Before extraordinary
item and cumulative
effect of changes in
accounting
principles $ .58 $ 0.47 $ 1.23 $ 1.03
Extraordinary item,
net - (0.55) - (0.55)
Cumulative effect of
changes in account-
ing principles - - - -
Net income $ 0.58 $ (0.08) $ 1.23 $ 0.48
Fully diluted:
Before extraordinary
item and cumulative
effect of changes in
accounting
principles $ 0.58 $ 0.47 $ 1.20 $ 1.03
Extraordinary item,
net - (0.55) - (0.55)
Cululative effect of
changes in account-
ing principles - - - -
Net income $ 0.58 $ (0.08) $ 1.20 $ 0.48
(1) Such items are included in primary calculation. Additional
shares represent difference between average price of common stock
for the period and the end of period price.
